UK coalition headed for rocks

Britain’s Deputy Prime Minister, Nick Clegg
, and senior Liberal Democrats have turned dramatically on
coalition partner David Cameron
over Europe, accusing the Prime Minister of endangering the interests of the British economy.

Just 24 hours after appearing to back Mr Cameron, sources close to Mr Clegg made clear that he believed Mr Cameron had been guilty of serious negotiating failures that risked damaging the national interest, British jobs and economic growth.

Mr Clegg’s fury puts the coalition under the most severe strain since its formation 19 months ago, with Europe now seen by some MPs as a potential “deal breaker".

One source said Mr Clegg “couldn’t believe it" when he was woken at 4am in his flat in Sheffield to be told that talks on how to save the euro at the Brussels summit had “spectacularly unravelled".

Accusing Mr Cameron of failing to play the diplomatic game effectively, the source said: “He could not believe that Cameron hadn’t tried to play for more time. A menu of choices wasn’t deployed as a negotiating tool but instead was presented as a take it or leave it ultimatum.

“That is not how he [Mr Clegg] would have played Britain’s hand."

The source said Mr Clegg feared Britain would now be the “lonely man of Europe", with less influence, not more, for the City of London; less influence with the US and less foreign investment. “It leaves us isolated in Europe and that is not in the national interest."

The stinging rebukes reflect Mr Clegg’s recognition that he can no longer take the hits for the coalition and defend policies with which he ­disagrees. Instead, he has criticised Mr Cameron in a way that will raise questions about the government’s ­ability to survive its five-year term.

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Mr Cameron refused to sign up to a revision to the Lisbon Treaty in the early hours of Friday – during a summit to save the euro – because other European Union leaders would not agree to safeguards he demanded for the City and the single market. A spokeswoman for Mr Cameron, who will address MPs in the Commons today, said the outcome, which left the UK as the only one of the 27 EU nations not signing the accord, was “not ideal, but the best we could get".

A Liberal Democrat minister said he was very angry that Mr Cameron had put “the interests of the City above manufacturing and real jobs".

On Friday Mr Clegg had faced heavy criticism from fellow Lib Dems for appearing to back the Prime Minister. After the summit he said Mr Cameron’s demands had been “modest and reasonable". It is understood he later concluded that, politically, he couldn’t be seen backing a deal the Lib Dems regard as having been forced by a group of hardline euro-sceptics.

Other Lib Dems came out against what had been agreed in Brussels in the name of the coalition. Former party leader Paddy Ashdown, writing in the Observer, said the coalition “must" survive in the national interest. But he said the damage had been enormous. “At a time of economic crisis, it is now more attractive for investors to go to northern France than to isolated Britain," he wrote. “We have tipped 38 years of British foreign policy down the drain in a single night. We have handed the referendum agenda to the euro-sceptics. We have strengthened the arguments of those who would break the union. We have diminished ourselves in Washington."

The Lib Dem peer Shirley Williams was equally robust. “It will diminish our influence far beyond Europe, in Washington, Beijing and New Delhi, capitals that value the influence they believe we have in Brussels."

Another Lib Dem peer, Lord Oakeshott, said the party would try to force Mr Cameron back to Brussels to mend the damage. “Many of us were shocked and stunned on Friday," he said. “But we are now finding our voice. Nick Clegg and our Liberal Democrat leaders must force Cameron back to the negotiating table to fight for our vital interests in Europe, not leave an empty chair and Britain isolated, impotent and ignored."

Labour claimed that the UK government had deliberately tried to wreck the summit by tabling a protocol the day before demanding that single market rules no longer be subject to majority voting but open to a national veto. Labour suggested Cameron had sought to torpedo the summit. Downing Street denied this.

Shadow foreign secretary Douglas Alexander said the root of the “fateful decision" lay in Cameron’s concessions to Eurosceptics during his leadership campaign in 2005, when he promised to pull the Tories out of the centre-right grouping, the European People’s Party. “Ever since, he has been following his party, not leading his party on Europe."

John Kerr, the former UK permanent representative to the EU, said that even under Margaret Thatcher the country had been at the heart of negotiations over Europe. He said: “I am very puzzled that we chose to pick up the ball and leave the pitch before the game started. I’m very uneasy because I’m very worried about the empty chair."